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Complex decision with ahp

This paper investigates the feasibility of applying the Analytical Hierarchy Process (AHP) in dealing with complex decision problem to improve the group decision making by a more systematic and logical approach. In order to gain some preliminary understanding, we begin with going through a brief literature review of Complex Decision and how AHP address it. As an example, we use a case study of Calisto Corporation, a small enterprise co-founded by writer, in using the AHP to find their focus area for further development. We also use Expert Decision Software to solve the problem presented in the case study.

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Complex decision with ahp

  1. 1. Analyzing Complex Decision using Analytical Hierarchy Process and Expert Choice Software Operation Management (BOM 7094) Assignment Uun Ainurrofiq | 1111200141
  2. 2. Jhonny’s firstworldproblem Should I choose Linda, Mei Mei, or Nguyen? use AHP technique to Find Jhonny’s Perfect Soulmate..!! Linda : Mature, Independent but not pretty Mei Mei : Cute, Smart but childish Nguyen : Pretty, Rich but not so fun Shika : Rock Star
  3. 3. This paper in brief… Complex Analytical Improved Expert Group Decision Hierarchy Choice Decision Process Problem Method Tools More Systematic & Logical Approach
  4. 4. Case Study Scenario Calisto Corporation | Bandung - Indonesia "Jack of all trades, master of none" Goal : Find Calisto Corp Project Focus
  5. 5. The procedure for using the AHP can be summarized as below: Comparing Defiene the Synthesizing Alternative Final Goal s with Priorities Criteria Decompose Establish Problem to Priorities Make Hierarchy of among the Criteria and Criteria and decision Subcriteria Sub Criteria
  6. 6. #STEP.ONE Goal Win Paradigm. Brad Sugar on how to find Calisto Corp Project Focus the perfect job
  7. 7. #STEP.ONE Goal Criteria SubCriteria Alternatives Fun Passion Knowledge #STEP.TWO Calisto Corp Project Focus CapexOpex Capital Management Skill Employee Money Benefit Social Market Growth Potential Business Expansion
  8. 8. Goal Calisto Corp Project FocusCriteria 1 Passion Management positive feelings toward the project. How much they willSub 1.1 Fun enjoy and love the activity How far will management knowledge improved by doing the project. AlsoSub 1.2 Knowledge considering new skill, new contacts & network, new ideas etc.Criteria 2 CapitalSub 2.1 CapexOpex Money required to run the project Management Management self-efficacy in handling the project. This also related toSub 2.2 Skill current experience and knowledge Employee availability in the area. Low skilled employee considered easy toSub 2.3 Employee be found, whereas high skilled employee is harder to be found, trained and retainedCriteria 3 BenefitSub 3.1 Money Profit gained in the form of money Benefit which will be enjoyed by the community eg. Employment, betterSub 3.2 Social product available, satisfied needsCriteria 4 PotentialSub 4.1 Market Growth How big is the opportunity due to market growth, increasing demand Business How big is Calisto capability will improve to capture the opportunity ofSub 4.2 Expansion growing market
  9. 9. #STEP.THREE Establish Priorities among Criteria and Sub Criteria
  10. 10. #STEP.THREEEstablish Priorities among Criteria and Sub Criteria << Overall Result
  11. 11. #STEP.FOUR Comparing the Alternatives with Criteria Sub-criteria Assessment Technique Source Sub 1.1 Fun Pairwise Management Subjective Input Sub 1.2 Knowledge Pairwise Management Subjective Input Sub 2.1 CapexOpex Direct Accounting Report Sub 2.2 Management Skill Pairwise Management Subjective Input Sub 2.3 Employee Pairwise Management Subjective Input Sub 3.1 Money Direct Accounting Report Sub 3.2 Social Pairwise Management Subjective Input Sub 4.1 Market Growth Direct Accounting Report Sub 4.2 Business Expansion Pairwise Management Subjective Input Noted that pairwise comparison based on person judgement, therefore it is very subjective. To minimize the subjectivity, we also use direct assessment for some known parameter.
  12. 12. #STEP.FOUR Comparing the Alternatives with Criteria * *used as information source for direct assessment
  13. 13. #STEP.FOURComparing the Alternatives with Criteria << Overall Result
  14. 14. #STEP.FIVE Synthesizing Final Priorities Overall ResultTable 6. Project priority wth respect to criteria
  15. 15. #STEP.FIVE Make the decisionCalisto management decide to focus on café and printing project and terminate its operation in Clothing Merchandise and Event Organizer. Because they have used the AHP, it is easy for them to trace their thinking and to justify the steps along the way to their decision. If they have second thoughts about the final outcome, they can revisit the process and make changes if appropriate. And if they choose to, they can reveal the details of their process to their consultants and confidants, to the employee, to the shareholders, or to anyone else who might be concerned with the decision.
  16. 16. SummaryAnalytic Hierarchy Process has shown Calisto team that the Café Project best satisfies alltheir criteria and judgments, followed closely by the Digital Printing Project. The otheralternatives fall short of meeting their criteria.AHP can be used to help us address other case which requires complex decision processExpert Choice software plays important role in this case by:• Brings structure and measurement to Calisto planning & selecting process• Helps Calisto determine strategic priorities and optimally allocates its resources• Communicates priorities and builds consensus among management• Documents and justifies Calisto strategic decisions• Enables Calisto to move forward quickly and confidently
  17. 17. Thank You...